FINRA Sanctions MetLife Securities, Inc. $25 Million for Negligent Misrepresentations and Omissions in Connection With Variable Annuity Replacements

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The Financial Industry Regulatory Authority (FINRA) announced recently that it has fined MetLife Securities, Inc. (MSI) $20 million and ordered it to pay $5 million to customers for making negligent material misrepresentations and omissions on variable annuity replacement applications for tens of thousands of customers. FINRA alleged that each misrepresentation and omission propounded by MSI made the replacement appear more beneficial to the customer, even though the recommended variable annuities were typically more expensive than customers’ existing variable annuity. According to FINRA, MSI’s variable annuity replacement business constituted a substantial portion of its business, generating at least $152 million in gross dealer commission for the firm over a six-year period.

FINRA advises that replacing one variable annuity with another involves a comparison of the complex features of each security. Accordingly, variable annuity replacements are subject to regulatory requirements to ensure a firm and its registered representatives compare costs and guarantees that are complete and accurate.

FINRA found that from 2009 through 2014, MSI misrepresented or omitted at least one material fact relating to the costs and guarantees of customers’ existing variable annuity contracts in 72 percent of the 35,500 variable annuity replacement applications the firm approved, based on a sample of randomly selected transactions. Examples from FINRA’s review found that:

• MSI represented to customers that their existing variable annuity was more expensive than the recommended variable annuity, when in fact, the existing variable annuity was less expensive;
• MSI failed to disclose to customers that the proposed variable annuity replacement would reduce or eliminate important features in their existing variable annuity, such as accrued death benefits, guaranteed income benefits, and a guaranteed fixed interest account rider; and,
• MSI understated the value of customers’ existing death benefits in disclosures.

According to Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, “Variable annuities are complex and expensive products that are routinely pitched to vulnerable investors as a key component of their retirement planning. Firms engaging in this business must ensure that the information on the costs and benefits of these products provided to customers is accurate, and that their registered representatives are sufficiently trained to understand and explain the risks and complex features of what they are selling. These obligations take on even greater importance when a significant part of a firm’s marketing effort involves switching customers out of existing annuities.”

FINRA also found that MSI failed to ensure that its registered representatives obtained and assessed accurate information concerning the recommended VA replacements, and did not adequately train its registered representatives to compare the relative costs and guarantees involved in replacing one variable annuity with another. According to FINRA MSI’s principals did not consider the relative costs and guarantees of the proposed transactions. FINRA alleged that MSI principals ultimately approved 99.79 percent of variable annuity replacement applications submitted to them for review, even though nearly three quarters of those applications contained materially inaccurate information.

FINRA further found that MSI failed to supervise sales of the GMIB rider, the firm’s bestselling feature for its variable annuities. The rider was marketed to customers (many of whom were already holding MetLife annuities) as a means of providing a guaranteed future income stream. The GMIB rider is complex and expensive—annual fees during the relevant period ranged from 1 percent to 1.5 percent of the variable annuities notional income base value. FINRA found that a frequently cited reason for MSI’s recommendation of variable annuity replacements was to allow a customer to purchase the GMIB rider on the new variable annuity contract. Nevertheless, MSI failed to provide registered representatives and principals with reasonable guidance or training about the cost and features of the rider.

In addition, FINRA found that since at least 2009, MSI customers have received misleading quarterly account statements that understate the total charges and fees incurred on certain variable annuity contracts. Typically, the quarterly account statements misrepresented that the total fees and charges were $0.00 when, in fact, the customer has paid a substantial amount in fees and charges.

If you have suffered investment losses as a result of investing with MetLife Securities, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s or brokerage firm’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a complimentary initial consultation.

Fraud Charges Filed Against Owners of Jay Peak Ski Resort Relating to Millions of Dollars Solicited under the EB-5 Immigrant Investors Program

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The Securities and Exchange Commission recently announced fraud charges and an asset freeze against a Vermont-based ski resort and related businesses allegedly misusing millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program. The Securities and Exchange Commission filed a complaint for Injunctive and Other Relief against Ariel Quiros, William Stenger, Jay Peak, Inc., Q Resorts, Inc., Jay Peak Hotel Suites L.P., Jay Peak Hotel Suites Phase II L.P., Jay Peak Hotel Suites Phase II L.P., Jay Peak Management, Inc., Jay Peak Penthouse Suites L.P., Jay Peak GP Services, Inc., Jay Peak Golf and Mountain Suites L.P., Jay Peak GP Services Golf, Inc., Jay Peak Lodge and Townhouses, L.P., Jay Peak GP Services Lodge, Inc., Jay Peak Hotel Suites Stateside L.P., Jay Peak GP Services Stateside, Inc., Jay Peak Biomedical Research Park L.P., and AnC Bio Vermont GP Services, LLC. The SEC’s case was unsealed in federal court in the United States District Court Southern District of Florida, and the court has appointed a receiver over the companies to prevent any further spending of investor assets.

The SEC alleges that Ariel Quiros of Miami, Florida, William Stenger of Newport, Vermont, and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont. According to the SEC complaint, investors were told they were investing in one of several projects connected to Jay Peak Inc., a ski resort operated by Quiros and Stenger, and their money would only be used to finance that specific project. The SEC complaint alleges that instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects. The SEC complaint alleges that more than $200 million was used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.

According to the SEC’s complaint, Quiros improperly tapped investor funds for such things as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort. The SEC’s complaint charges Quiros, Stenger, Jay Peak, and a company owned by Quiros called Q Resorts Inc., as well as, seven limited partnerships and their general partner companies with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Four other companies are named as relief defendants in the SEC’s complaint for the purpose of recovering investor funds transferred into their accounts.

If you have suffered investment losses contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors nationwide. You may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a complimentary initial consultation.

FINRA Lawyers can help protect investments

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When someone has made financial investments in the form of securities, it is possible that their investments won’t result in the profit they anticipate. This can happen for a number of reasons, including changes in the industry you’ve invested in, but it can also be the result of broker misconduct. If you feel that your investments failed as the result of actions made by your broker, it’s important to find reliable a FINRA lawyer to help you with your case. There may have been misconduct on the part of your broker or brokerage firm which caused your investments to fail, and it’s important to explore all of these possibilities when determining the cause of your financial losses. FINRA is the regulatory organization which oversees the financial industry, including securities investments. A security is an investment which is made by individuals or businesses with the anticipation of a return in profit. Because these types of investments can be a good way to ensure a comfortable future for yourself and your family, investing has become a more common practice. FINRA exists to protect the market’s integrity and provide investors quick and effective regulation should they run into trouble. FINRA isn’t part of the government, but are authorized by congress to protect American investors in Florida and nationwide. Of course every investor assumes they are trading in a fair financial market, and FINRA’s regulatory efforts make this true the majority of the time.

However, there are predatory practices employed by brokers which can lead to losses on your end. If you find yourself in this situation, it’s likely that you have already agreed to solve any disputes through arbitration. When entering into arbitration for financial disputes there are many guidelines and procedures which have strict deadlines and must be followed accordingly. Failure to properly fill out paperwork, provide documentation, respond to motions, etc. can all invalidate your claim, resulting in potentially huge losses on your end. A qualified FINRA lawyer in Florida will help you navigate the many facets of securities arbitration and make sure that your claim is not only handled according to all of FINRA’s procedures, but handled in a way which ensures the best possible outcome for investors.

The Hanley Law are experienced FINRA lawyers who help investors in Naples, Fort Myers, Sarasota, Tampa, greater Florida and nationwide settle their FINRA related disputes or arbitration. To have your case evaluated for free by experienced FINRA lawyers, contact The Hanley Law.

Futures Fraud and How To Avoid It

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What is Futures Trading?

Futures trading is a formal agreement between parties to buy or sell a particular commodity at a certain price and at a specific point in time. The trading can be done with a number of different commodities: precious metals (i.e., silver or gold), petroleum products (i.e., crude oil and unleaded gas), foreign currency (i.e., Euros, Yen, or Deutschmarks), and agricultural products (i.e., corn, soybeans, or cattle). This type of trading is considered high-risk trading and is best suited for experienced investors who are willing to potentially risk losing their entire investment. For this reason, it’s always best to confer with a knowledgeable investor and do research before agreeing to any trading activity and exposing yourself to potential futures fraud.

What is Futures Fraud?

Futures fraud occurs when the party selling the commodity (e.g., commodity broker, financial advisor, or other third-party) engages in illegal activities or practices while trading futures to investors. Illegal activities often involved in futures fraud can include trading without the investor’s consent, false statements about the risk or value of the investment, withholding information from the investor on purpose (nondisclosure), trading on the investor account for commissions without regard for the investor, and using the investor’s assets for anything other than the stated purpose.

What Are Some Warning Signs of Futures Fraud?

The following are some common warning signs of potential futures fraud:

  • Investment opportunities that seem too good to be true and get-rich-quick schemes.
  • Promises or guarantees of large profits.
  • Assurances of little or no financial risk in the venture.
  • Claims of currency being traded in an “Interbank Market,” which can refer to a collection of transactions between banks and investment banks.
  • Unsolicited telephone calls about investment opportunities.
  • Requests for urgent transfers of cash to a recipient.

 

Do You Need A Futures Fraud Lawyer?

If you believe that you are the victim of futures fraud, reach out to Hanley Law and we can examine your case and determine the best course of action. Hanley Law has the experience required to help you receive the best possible outcome.

What is Securities Arbitration?

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Securities Arbitration is the process, which takes place following a dispute with a broker or dealer. Prior to arbitration, the investor has determined that the broker engaged in some form of wrongdoing, or otherwise negligent action that resulted in a loss. Depending on the amount of the claim, the investor may or may not have to appear before an arbitrator or group of arbitrators. Arbitration is an alternative to settling in court and is often the preferred method of dispute resolution because it is typically faster and less expensive.

While typically a contract between a firm and investor is what provides ground for arbitration, the absence of a contractual agreement does not mean that the dispute cannot be settled through arbitration. If the broker or firm is registered with the Financial Industry Regulatory Authority, they are bound to FINRAs procedural guidelines, which include the duty to participate in arbitration when a conflict arises.

Arbitration is NOT an investor complaint. If you want to make FINRA aware of any suspicious activity then you should file an investor complaint. Arbitration is similar to a court case, with formal proceedings but for the reasons stated above is a simpler and quicker alternative to litigation. If a claim is under $50,000 then the dispute can be settled through what is known as “Simplified Arbitration”. In this scenario, parties provide case materials, which are reviewed by an arbitrator; this does not require parties to appear in person. For cases involving larger sums, arbitration takes place in-person and is reviewed by a panel of up to 3 arbitrators.

To initiate an arbitration, the investor must submit what is known as a “Statement of Claim”. The statement of claim must be articulate and while there is no standardized format, following the format of a suit in court is effective. The statement of claim should include all the pertinent information that the arbitrator(s) need to make an intelligent decision. This included the nature of the dispute, any background information, dates, types of securities at hand, names of the parties involved, the kind of transactions that took place and the damages sought.

Following the statement of claim, the respondents must answer to the allegations. This must also be detailed and simple denial will not suffice. At this point in time the respondent can file a counter-claim against the investor or a 3rd party involved. Once the submission of facts from either side is received by FINRA, a hearing location is chosen. Before the hearing is a discover period, where documentation is provided and exchanged amongst parties involved and FINRA officials. This stage is a window of opportunity for the assertive attorney as it is the opportunity to obtain any and all relevant information from the other party prior to the hearing. Often, the persistence of a dedicated attorney during the prehearing discovery phase can result in a favorable verdict for their client.

The hearing itself is scheduled in advance and follows a similar format to a case in court. Witnesses are interviewed, cross-examined and evidence is produced. A series of questions are asked and there are multiple stages before the process is concluded. The arbitrators will determine what awards are served usually within 30 days of the last hearing. The award will include the basic facts of the dispute but does not have to provide justification or rationale behind the actual dollar amount awarded. The opportunity to appeal a decision exists on the state and federal level but it is rarely ever successful.

The Hanley Law is a Naples, Florida based firm who have an extensive track record of successfully securing awards for their clients. The arbitration process is complex and difficult to navigate without the guidance and advocacy that skilled attorneys can provide. Hanley Law offers a free case evaluation to determine the best course of action for you.

Florida FINRA Litigation

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FINRA is the financial institution which regulates securities and the financial market. FINRA attorneys focus their practice on niche areas of FINRA law, whether they are defending brokers against regulatory inquiries, working on arbitration claims involving both investors & brokers, or defending investors against predatory broker practices. Most, if not every, brokerage firm requires potential investors to agree to resolve any disputes through FINRA arbitration. This is usually outlined in the opening documents, and states specifically that any issues will be settled through FINRA dispute resolution. Legal professionals with experience representing both investors & brokers before FINRA arbitrators should be familiar with all procedures, the forum & arbitrators. With their experience and knowledge, the first step to take if you have an issue with an investment should be to contact an accomplished FINRA attorney. They know how to properly prosecute cases on the behalf of both brokers and investors.

If you are an investor, they are many ways that you might feel you’ve been wronged by a broker or financial institution. You might believe that an investment made was unsuitable to your investment portfolio, or that an investment was made based on misleading or even fraudulent statements made by your broker. You might feel that your portfolio was over-concentrated in one industry or area, which resulted in your investments not being profitable or worthwhile. Even more concerning, you might feel your account was subjected to unauthorized trading, or churning (excessive trading to increase broker commissions). However you might feel that your investments have been mishandled, it’s important to consult with an attorney experienced in FINRA litigation to evaluate your case and determine any legal discourse necessary.

Most investment issues are resolved through securities arbitration, and as stated earlier, many brokers outline this requirement in their opening documents. Securities arbitration has become the most popular means of resolving broker-dealer conflicts in Florida and nationwide, largely due to a Supreme Court decision in 1987, and has long been used as it provides a quick and inexpensive alternative to arbitrating through the courts. After beginning the arbitration process, there are many different factors which need to be determined and decided upon by all involved parties, including arbitrator panel composition, hearing locations, and other details related to the arbitration process. While cases typically take between 1 year and 14 months to resolve, the process can be delayed or expedited depending on the complexity of the issue or the discovery timeline.

In Orlando and Florida, there are strict deadlines and regulations related to securities arbitration that can elude an inexperienced individual. If you are concerned about your investments it’s important to consult an experienced attorney who understands all FINRA litigation and arbitration requirements as they relate to Florida. Contact the Hanley Law to have your case evaluated for free and determine the legal validity and potential outcomes of your unique situation.

FINRA Arbitration Orlando, Florida

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FINRA stands for the Financial Industry Regulatory Authority. It is an organization that oversees the securities industry. The organizations primary function is to protect investors and does so by subjecting traders to a set of rules and regulations. Enforcing rules and subjecting violators to punishment is what takes place after the detection of any wrongdoing. Educating the public is a primary function as well, as the best way to reduce the impact disputes have, is to avoid them altogether. Being that we live in an imperfect world and trade in an imperfect marketplace, disputes are inevitable. Once a dispute ensues, FINRA’s forum handles the overwhelming majority of arbitration’s and mediation’s with locations in all 50 states as well as in the United Kingdom and Puerto Rico.

Since practically all disputes in this industry pass through the hands of FINRA, it is important to retain an attorney that is knowledgeable, experienced and tested when it comes to FINRA regulations, procedural nuances and formal hearings. While resolving a security complaint doesn’t necessarilly require you to have an attorney, if you are seeking a beneficial outcome, it is in your best interest. Brokerage firms will be represented by an attorney which is why you need to come represented as well. The attorneys that that defend brokerage firms are savvy and you’ll need a fierce advocate to represent your best interests.

Depending on the circumstances, a dispute will either result in Arbitration or Mediation. The former closely parallels a trial that would take place in a United States court. The state of Florida has specific narrowly tailored guidelines for arbitration that change the landscape of the field. In other states, individuals with no license to practice law can provide advice to disputant investors for a fee. Arrangements of this nature are banned in Florida. In addition to this, arbitrators can include reasonable attorneys fees as part of the settlement for the receiving party. Before any type of settlement is awarded, the facts are reviewed. The process requires an initiation (commencement) , a statement of claim, examination of witnesses and presentation of evidence.

The Hanley Law is a South Florida based firm with the FINRA experience and insight needed to successfully secure a settlement on your behalf. The firms history with the security industry precedes the creation of FINRA. Whether your investments were poorly handled or you were the victim of stock fraud, Hanley Law offers a free case evaluation to determine the best course of action for you.

Fraud Lawyers in Florida

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Investing in securities can be a great way to secure your financial future; however, it’s important to understand the ways your investments can be mishandled. Understanding the different types of fraudulent activity that can occur is crucial if you plan to invest your money. Making an arrangement with a stockbroker should be carefully considered, as there are many ways that your investments can be mishandled. Stockbroker fraud constitutes a large portion of all lawsuits related to securities, so understanding the different ways your broker could be mishandling your accounts is essential for investors.

You might feel that your investments are unsuitable to your portfolio, over-concentrated in one area or industry, were misrepresented to you (either by purposefully withholding information or presenting misleading information), or that your broker was churning your investments. Churning refers to when a broker trades excessively on your behalf to increase their commissions. Insurance and annuity fraud is often subject to this; annuities, for example, offer some of the highest commissions for stockbrokers, and as such can be misrepresented or sold to investors when it is not in their best interest.

In addition to stockbroker fraud, there are other abuses that regulatory agencies like FINRA & the SEC (Securities & Trade Commission) look out for. Insider trading, fraud and market manipulation also occur in the industry, when individuals privy to certain company information use that information to help theirs or others investments. Investment schemes need to also be considered – these include methods for stealing investor’s money, using misrepresentation and instilling false hope into the investor. A well-known example of an investment scheme is the Ponzi scheme – Where brokers will use the money from new investors to pay their current clients, rather than money generated from the investment. To this end, when the Ponzi scheme is shut down, there isn’t enough real money that can be used to pay back investors. Pyramid schemes are another example of an investment scheme.

Securities violations come in many different forms and carry severe punishments. The process for solving these issues can come in the form of litigation or, more commonly, arbitration, and anyone looking to recover damages from a securities lawsuit should fully understand both options and the prerequisites to filing a claim. If you feel your investments have been mishandled or you may have been subject to securities abuses, it’s important to speak with an attorney who specializes in securities arbitration and litigation. The Hanley Law offer free case evaluations and can help you navigate through your claim.

Security Fraud in Florida and Nationwide

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Securities Arbitration and Litigation Attorneys

Securities Fraud is widespread and as an investor, it is essential to be aware of the most common types of fraud so you can take preventative measures, maximize your gains and reduce the possibility of taking a loss. Not all types of fraud are the result of premeditated criminal schemes, though a lot of them are. Professionals in the securities industry are trained in making sound investments so even if they didn’t have the intention of compromising your investment, in the event they have or do in the future, those individuals can still be held responsible. Similar to the medical profession, a doctor who commits malpractice may not have had the intention of harming the patient, but if they do they can be held responsible in a civil court and even a criminal court if laws were violated in the process. This logic is also applicable to investment bankers, firms, stock brokers,etc.

The most common types of fraud are propagated by individuals who practice outright deception and those who are incompetent/irresponsible. Whether your losses are a result of reckless practices or flat out lies, the implications for you don’t vary as much as they do for the individual you trusted with your hard earned money. In either case, you can seek to recover losses suffered.

Investments Compromised due to Negligence

One of the most common types of fraud occurs when an inappropriate investment is made, this is related to the investors status and is usually a high risk investment. For example, a particularly high risk investment would not be right for a person who is retired or an investor with a conservative track record.

Another form of fraud is when the firm fails to perform their fiduciary duty to the investor, this is called failure to perform due diligence and commonly this results in the firm investing someones funds in a company they didn’t properly research.

Additionally, failure to diversify an investors portfolio is considered an inappropriate practice. Over concentrating funds in one investment is a poor practice that can result in losses for the investor.

Brokers Knowingly Compromising Your Investment

There a number of circumstances when brokers knowingly compromise your investment for their own personal gain. There are a wide range of practices from over-trading to selling penny stocks that are considered fraud. Excessive trading is when a broker trades with the primary intention of profiting from the commission they make as a result of the trade, this is called Churning and is illegal. To prove churning, attorneys will look at excessive activity, that is quantifiable by turnover rate and cost-equity ratio.

Misrepresentation occurs when a stockbroker fails to disclose pertinent information to an investor, which interferes with their ability to make a sound decision/ investment. Omitting facts or details about a company is a common cause of investment loss.

Investors who promise guaranteed returns on investments or claim that an investment will offer high returns with little to no risks are committing fraud. Shy away from brokers or firms that guarantee a return , usually one that is just too good to be true.

Finally, trading without permission of the investor is considered unauthorized trading and is also a poor practice. In certain circumstances, the broker does have permission to trade without consulting the investor only if they receiver prior authorization, these accounts are called discretionary accounts.

If you’ve suffered losses due to fraudulent practices, contact the The Hanley Law, who are offering free case evaluations. Hanley Law have experience recovering losses for sole investors and in class actions suits against major investment firms.

How to Recover Damages Through Securities Arbitration

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Florida Securities Arbitration Attorneys at Hanley Law, PLLC

If you have investments with a financial corporation or brokerage firm, it’s important to monitor your investments to ensure they are being handled according to your agreement with the broker. If you suspect that some fraudulent activity might be going on, including any activity you didn’t consent to, you might want to consider resolving the issue through arbitration. Arbitration is how the majority of disputes in the securities industry are resolved (as opposed to a traditional courtroom trial) because it is a quick and inexpensive way to solve complicated concerns.

The process will typically take anywhere between 12-14 months from the time the claim was filed, but the timeframe will vary depending on certain factors (# of involved parties, complexity of issues, personal schedules, volume of necessary discovery) and can be expedited in special circumstances (due to medical concerns or age). The first step is to file a Statement of Claim with FINRA. This will include the details of the dispute, including identifying the Claimant (who filed the claim) and Respondent (who the claim is against), and the type of damages requested. The Claimant must also file an Arbitration Submission Agreement and pay a filing fee, which depends on the amount of the claim, number of discovery motions, number of hearing sessions and any postponements. Next the claim gets served to the respondent(s), who then file an “answer” which specifies any relevant facts and outlines their defense.

After the answer is received, the arbitrator selection process begins. The Claimant and Respondent are provided lists of arbitrators (generated from FINRA’s Neutral List Selection System) and get the opportunity to evaluate their potential arbitrators and eliminate those they don’t want on their case. Depending on the dollar amount of the damages requested and parties involved, 1-3 arbitrators may be assigned. Next, you will have a prehearing conference with all parties involved including the appointed arbitrators to determine the timelines for discovery, briefing & motions, and evidentiary hearing dates.

After all discovery and any motions have been filed it is time for the actual hearing, which is similar to a normal trial where the Claimant will try and prove their claim and the Respondent will try to defend their position. The hearing will typically include testimony from involved parties and any witnesses, and reviewing any evidentiary documents. After the hearing arbitrators will then deliberate and render their decision of award, which is issued within 30 days. There is no appeals process offered through FINRA, but district courts do have the power to overturn an arbitration award under certain circumstances. Brokerage firms & brokers then have 30 days to pay you, or they risk suspension by FINRA.

This is a highly simplified version of the securities arbitration process, intended to give a general overview of how to collect damages through arbitration. To learn more or to have your case evaluated for free by legal experts, please contact The Hanley Law.